Importance Of Accounting To Non-Profit Making Organization

Project and Seminar Material for Accountancy / Accounting

Importance Of Accounting To Non-Profit Making Organization


Abstract


This study is titled importance of Accounting to non profit making organization.

What profit accounting does for non profit oriented organization is to enable the management is measuring performance decision making and adequate planning in finding out some possible solutions to the numerous problems.

In chapter one, it deals with introduction background of the study, statement of study purpose of study significance of study research questions etc

Hence, proper accounting is required in non profit making organization in order to ascertain the indebtedness of the organization and also pinpoint ways by which settlements may be made

Chapter two deals with the literature review, importance of accounting to non profit making organization, the effects of accounting to non profit making organization significance role of accounting to non profit making organization etc

The researcher work ends in chapter three with summary, conclusions and recommendations.


Table of Contents


Preliminary Page(s)

  • Title page
  • Approval page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of contents

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of the study
  • 1.3 Purpose of the study
  • 1.4 Significance of the study
  • 1.5 Research questions
  • 1.6 Hypothesis
  • 1.7 Scope of the study
  • 1.8 Limitations of the study

Chapter Two

2.0 Literature Review

  • 2.1 The importance of accounting to non-profit making organization
  • 2.2 The effects of accounting to non-profit making organization
  • 2.3 The significant role of accounting to non-profit making organization
  • 2.4 The role of accounting to non-profit making organization
  • 2.5 The summary of the chapter

Chapter Three

3.0 Research Design and Methodology

  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Sources/Method Of Data Collection
  • 3.4 Population And Sample Size
  • 3.5 Sampling Technique
  • 3.6 Validity And Reliability Of Measuring Instrument
  • 3.7 Method Of Data Analysis

Chapter Four

4.0 Presentation and Analysis of Data

  • 4.1 Introduction
  • 4.2 Presentation Of Data
  • 4.3 Analysis Of Data

Chapter Five

5.0 Summary of Findings

  • 5.1 Conclusions
  • 5.2 Recommendation
  • 5.3 Suggestions for further study
  • Reference
  • Appendix

Chapter One


1.0 Introduction

1.1 Background of the Study

American accounting Association defined Accounting as the process of identifying, measuring and communicating economic information to permit inform judgment and decisions by the users of the information. This information is presented system matically and accurately recorded financial report about an entity engage in economic activity to users of such report. (Akeju, 2003, 2003; 29)

In this study accounting is a systematic record measurement and economic process used to report on the financial activities of association not for profit making motive, not for profit organization as defined by Akeju (2002) ‘’ are those organization which are established not the objective of making profit and distributing such profit to their members in form of interest on capital in the business organization to pursue the objective of which the business is established for’’

The name not for profit can be misleading because the impression that the business are not allowed to partake in profit making activities this is not such, the business are allowed under law to undertake any lawful business activities not against their constitution and use the net cash flow for which they are established therefore, it is possible that not for profit making organization undertake tracing activities which can bring profit to them but such profit is not to be distributed as a result to the members in form of interest or dividend.

Organization that fall under non-profit motive include public and private organization which set up to promote art, culture, religion, science, social club and so not. Examples of them includes stride unions student unions, sports, religion, social clubs and so no. it is established by members of like minds do their welfare, they are required to be registered as an association under the companies and Allied matters Decree no 1 of 1990 as amended. They are intended for profit but they indulge in any activities that is profit oriented

The official of these organizations are elected mostly for their commitment than for their commitment than for the financial knowledge. Therefore, only the simplest records are maintained including a cash book periodically, the records are passed to the associations accountant who many prepare a receipt and payments account. If and expenditure account. Determines the accumulated fund and finally close it up by a balance sheet for the financially period

Normally the association in this range may carry out activities in different several ways there may not be uniform title for such transactions amongst the organizations. As a result such similar transactions are financially treated alike despite the different in title they may bear. Then the financial statement whether the reported results of the organization truly reflects its operations

The accounting entries of a non-profit making organization is governed by the basic principles in book keeping and accounts. It is recorded like the way incomplete records is recorded because most of the accounting information is not available as they are provided and maintained by incompetent staff. However, financial report produced as based on the reputations of the associations, some associations in line with their cord of operations requires that its officers should prepare and present to members and users monthly, quarterly semi annually or annually reports since most association prepare and present financial statement annually In any period a small profit or loss usually arises. In the long term however, profits are accumulated only to the extent that they are needed, for example to enable self financing expansion to take place.

The associations organize fund raising activities to improve their financials for instance, dances and parties could be organized. Also a bar to provide refreshment to members at commercial rates could be established where the activities is for a temporary nature as is in the case of dances and parties, the expenses is simply set off against revenue in the income and expenditure account. But where the activities are on the permanent basis, a separate trading account should be prepared and the profit or loss from the activity is transferred to the income and expenditure account.

The financial statement of the non-making organization is probably very important and most relevant source of information to the members, management of the association and interested outsiders. This is because they indicate the general condition for the organization and used in comparing past result with current one.

This study aims mostly at investigating the book keeping and financial records of the non-profit making organizations ion general such organizations are generally chartable and non-profit making oriented. Since, the organizations make the financial transactions which are subject to be accounted for with special attention on the receipts and payments accounts income and expenditure account, accumulated fund, the bar trading account and the balance sheet.


1.2 Statement of the Problem

The fact that much non-profit making organization keeps records or the activities in their organizations. Many do not keep proper accounting records and do not keep or see its significance in general. These therefore, are some of the problems in this research topic. But the main aims are the followings:

  1. Proper accounting records are not kept
  2. Payments are made without the approval of the authorized body
  3. Officers who receive cash, make the accounting records and bank at which result to improper accounting records
  4. Unqualified accounting officers and employees used brings about improper accounting records financial statements are externally audited

1.3 Purpose of the Study

This main purpose of this study is aimed at providing possible solution to the statements of the problems above they are

  1. To overhaul the accounting records expected to be kept and at proper standard
  2. To determine who authorizes payments and receipts and whether such are made according to the approval of the authorized person
  3. To find out the extent of the internal control system, whether it is weak or strong
  4. To ascertain whether financial statements are extremely audited periodically or elected accounting officers are qualified and competent in financial knowledge

1.4 Significance of the Study

This study will be extremely useful in many ways and they include

  1. It is an aid to management in measuring the performance planning and decision making
  2. It enlightens accounting officers to know the accounting records expected to be kept and steps towards proper accounting records
  3. Accounting officers members and interested parties will understand the relevance of proper accounting records to the organization performance and also to the Nigerian economy
  4. It ascertains the indebtedness of the organization settlement may be made.

1.5 Research Questions

The following questions were formulated

  1. Does officers elected base on their commitment rather than financial knowledge affect proper accounting record
  2. Does inadequate accounting records lead to fraud, embezzlement and misappropriation of fund in the organization?

1.6 Hypothesis

  1. HO; Accounting for non-profit organization has no significance effect in the organization’s performance
    HI; Accounting for non-profit organization has significant effect in the organizations performance
  2. HO; Payments made without the approval of authorized persons result in defrauding the organization
    HI; Payments made without the approval of the authorized person (s) do not result to defrauding the organization
  3. HO; Unqualified accounting officers and employees for their commitments rather than their financial knowledge results to improper accounting record
    HI; Unqualified accounting officers and employers for their commitments rather than their financial knowledge does not result to improper accounting records

1.7 Scope of the Study

Accounting to non-profit organization, is very broad topic that cannot be falling exhausted in this study. Nevertheless, this scope of study will encompass the junior and senior accounting officers


1.8 Limitations of the Study

This was constraint by these factors like

Time constraints

This study which requires a comprehensive exercise was done in the specification of three months there was not time for the researcher to locate his wanted auditors for hot review time was not enough to travel to other areas of interest.

Money

There was also constraints of money for traveling photocopying and printing.

Lack of data

There was also constraints in the fetch of relevant material which purpose to aid in the sources of this study like journals textbooks good other materials but have not hindered or hampered the successful completion of the works.


Chapter Five


5.0 Summary of Findings

From the previous chapters written, in chapter one, an attempt was made at introducing the studies, the historical background of the study “importance of accounting to non profit making organizations and also including in this chapter the statement of the problems, the purpose of the study, the scope of the study the limitations of the study hypothesis, and significance of the study these were adequately stated.

Chapter two presents at a glance the literature review of the subject studied. It includes items to be included in the accounting records the importance of accounting to non profit organization, the effects of accounting to non profit making the significances role of accounting to non profit making organization which goes with types of accounting to non profit making organizations and also the role of accounting to non profit making which goes with the format and the sources of revenue, outflow of resources and some theories on accounting for non profit oriented organization


5.1 Conclusions

Based on the research study it has been discovered that proper accounting for non profit oriented organization has important role in the organizations performance

Again, the payments made without approval of the authorized person (s) result in defrauding the organization thereby bringing about improper account records


5.2 Recommendation

Based on the findings of this research study with particular focus to the importances of accounting to non profit making organization.

These recommendations have therefore been made:

  1. Payment should be made according to the approval of authorized persons in other to minimize improper accounting records and the chance of defrauding the organization.
  2. Accounting officers should be qualified aid adequately competent and not be committed voluntarily or elected without financial knowledge in other to satisfy proper accounting records.
  3. The officer who receives cash should not be involved in banking it and at the same time make the accounting records. That is good system of internal control should be designed and implemented as to ascertain the organizations system of recording and processing transaction and access of its adequacy as a basis for the preparation of financial statement.
  4. External audit should be embarked upon periodically in other to prevent fraud and to assure all users of the accounting information that the account shows the true and fair view and complies with statute.
    Finally, those stewards have fulfilled their accounting and financial responsibility.

5.3 Suggestions for Further Study

Uwaechia Obiageh F. The researcher of this work, importance’s of accounting to non profit making organization is putting the following suggestions for further research study.

  1. Adequate research should be carried out by intending researchers for importance’s of accounting to non profit organization.
  2. Lastly, the researcher should be willing to work with his /her supervisor in other to produce an effective research work.

Importance Of Accounting To Non-Profit Making Organization


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